In the still-early phases of AI’s cultural adoption, companies throughout the land are throwing it against the wall to see where it sticks – AI’s al-dente test as we’ve called it. Along with that functional feeling-out process is a monetary one… how should AI be monetized, and who is willing to pay for it?
We’ve predicted rightly that companies like OpenAI will see a combination of users paying for premium app features, as well as B2B2C revenue streams. The latter happens through APIs and other SaaS vessels that equip brands with their own tools to build customer-facing AI agents and interfaces.
Then there’s Apple, which not only renamed AI (Apple Intelligence) but decided to not monetize it directly. Instead, AI is integrated throughout its products to boost their appeal. That makes sense for Apple as it’s a hardware business and all roads back to protecting and boosting sales of iThings.
Meanwhile, others have moved in the opposite direction. Companies from Adobe to Google are starting to peel away AI features from a core product to instead live within discreet – and often paid – apps. Will that work? The question boils down to whether or not consumers are ready to pay for AI en masse.
Market Evidence
Against that backdrop, we’ve observed three news items from the past week that embody the trend toward standalone AI approaches. Here they are in no particular order…
1. Adobe Firefly
Adobe announced last week that it will spin off a standalone Firefly app. Its capabilities were previously infused into the flagship Creative Cloud but will now have their own home. After incubating Firefly there, and seeding demand, it is time now to see if it can be its own revenue center. Though some AI features will remain in Creative Cloud apps, the highest value functions will be reserved for the standalone Firefly app. This includes generative AI to streamline asset creation for designers and creative economy pros. In fact, the Creative Cloud is one place where generative AI has found a natural and logical home. And that demand is likely where Amazon gets the confidence to start charging for Firefly. In its standalone form, it will cost $19.99 per month. This may be smart in meeting – and monetizing – AI’s moment. Or it may fall flat with an inability to scale to Adobe-sized adoption. We see at least a decent chance that Adobe ends up reversing this move, or at least moving a good portion of Firefly’s features back into the Creative Cloud.
2. Google Gemini
Google last week also made a move that many pundits questioned in peeling off Gemini’s capabilities into its own app, at least within iOS. Like Firefly, the AI functionality previously lived in the company’s main app – in Google’s case its main search app for iOS. But now users will be directed to open (or download) the standalone Gemini app. To be clear, it doesn’t appear that Google will be charging to use the app, as Adobe Firefly and others like ChatGPT do (at least for a premium tier). But this could be the first move in that direction. In fact, AI monetization in general will continue to be a key question mark for Google. Will it use AI to boost its core business (e.g., selling high-intent leads and offers as opposed to ads/links), or could it be a revenue center in its own right? As noted above, Apple has done the former. Google meanwhile has mostly steered away from users paying for things, outside of cloud storage, email hosting, and other enterprise-like functions. But until the monetization question is answered, the nearer-term question is if it’s the right time in AI’s adoption cycle to raise friction. In other words, will users want AI bad enough to stop what they’re doing in the Google main app to download a standalone Gemini app? We’ll soon find out… and that will be a telling moment for current AI demand.
3. Amazon Alexa+
Lastly, and most recently, Amazon yesterday unveiled Alexa+. This is Amazon’s way of answering the same question we once asked of Apple: Will its existing personal assistant get shelved or get a brain transplant? Like Apple did with Siri, Amazon is taking the latter approach, and the result is Alexa+. Powered by generative AI and completely rearchitected from Alexa’s younger self, it does things like tell you the best pizza nearby or how many packages you received last year. This naturally taps into Amazon IoT assets like Ring Cams, Fire TVs, or other points of intelligence in Amazon’s ecosystem – not to mention the core eCommerce engine. Back to the theme of this article, it will be a paid app at $19 per month – though it’s free for Prime users who already pay $15 per month. And like the above moves, the user demand signals that are revealed in the coming months will be telling of where we are now in AI’s adoption and monetization cycle. The scale of all three of the companies in this article will reveal statistically-siginficant demand signals. From that, we’ll know where we stand in AI’s hype cycle.
Header image credit: Jason Leung on Unsplash
